Football Clubs & R&D Tax Credits | Should there be a sector barrier to R&D claims?

Whilst football clubs are getting a lot of bad publicity of late due to having claimed UK R&D tax credits, this could perhaps be seen to be all clickbait by the media and some “white knights” on LinkedIn. The reality is the DSIT (formerly BEIS) guidelines, which define what qualifies for R&D, do not discriminate per sector. Therefore, without having reviewed the R&D claims, it is not possible to know if the claims are justified.

In the UK, businesses that engage in activities aimed at technological or scientific advancement may be eligible for R&D tax credits. While traditionally associated with sectors such as pharmaceuticals, manufacturing, and software development, as a result of recent media coverage the question has arisen: should football clubs (or sports organisations for that matter) be able to claim R&D tax credits?

This issue has sparked debate, with some arguing that elite football clubs invest significantly in innovation, while others argue that allowing them to claim tax relief is an inappropriate use of taxpayer funds.

The article in The Times that sparked the debate found that 28 of the UK’s leading sports clubs in football, rugby and cricket had claimed £13 million in R&D Tax Credits since 2019. The Guardian later revealed that Brentford FC received £3.2m in public money for R&D projects over the past two years but provided a bit of clarity around the nature of their claims, stating they were centred around sports science, medicine, and performance tracking technology to support training and tactics which has led to the publication of several academic papers on a range of sports specific subjects.

Media attention around UK R&D tax credits has grown significantly in recent years and the articles again brought this to people’s attention. As a result, it ignited interesting discussions on social media, with many R&D advisors offering performative and polished opinions in what might appear to be PR exercises to gain social media attention.

I have summarised some of the arguments for and against football clubs / sports organisations making R&D claims below:

The Case for R&D Tax Credits in Football

1. Innovation in Sports Science and Medicine

Modern football clubs invest heavily in sports science, injury prevention, and recovery techniques. From biomechanics analysis to cutting-edge rehabilitation methods, clubs push the boundaries of medical science to improve player performance and prolong careers. Given that R&D tax credits are meant to support scientific or technological advancements, some argue that football clubs engaged in medical and physiological research should of course qualify.

2. Advances in Performance Analytics and Technology

Data-driven decision-making has transformed football. Clubs utilise artificial intelligence, machine learning, and biomechanics to analyse player performance, optimise tactics, and develop new training methodologies. These innovations require extensive research and technological development, mirroring the type of work typically eligible for R&D tax credits.

3. Development of Sustainable Stadiums and Fan Engagement Technologies

Several Premier League clubs have invested in sustainable stadium design, energy-efficient infrastructure, and digital fan engagement platforms. From carbon-neutral stadiums to virtual reality fan experiences, clubs are exploring new technologies that could have broader applications beyond football. Proponents argue that these projects align with the objectives of R&D tax relief schemes.

The Case Against R&D Tax Credits for Football Clubs

1. Premier League Wealth and Public Perception

Premier League clubs generate billions of pounds annually through broadcasting deals, sponsorships, and ticket sales. Critics argue that clubs with vast financial resources should not receive tax relief intended to support businesses facing financial constraints in their R&D efforts. With players earning astronomical wages, allowing football clubs to claim tax credits may be seen as an unjustified subsidy for the wealthy.

2. Intended Purpose of R&D Tax Credits

R&D tax credits were designed to encourage scientific and technological breakthroughs that contribute to wider economic growth. While football clubs do engage in research, much of it is focused on commercial or sporting success rather than broader societal benefits. Unlike pharmaceutical research, for example, which leads to medical advancements for the public, football-related R&D primarily benefits clubs and their performance on the pitch.

3. Risk of Widespread Claims and Policy Loopholes

If football clubs were widely permitted to claim R&D tax credits, it could open the door for other industries to exploit similar loopholes. Clubs could structure their spending to fit within the R&D framework, potentially diverting funds away from industries where genuine innovation is more critical to economic progress. This could create an administrative burden for HMRC and undermine the core purpose of the tax credit scheme.

Conclusion

Premier League clubs regularly claim the front and back pages of the UK’s newspapers, and it is football that again has brought media attention to R&D tax credits. Whilst it made for interesting discussion, on reflection I can’t help but think that again the debate centred around the wrong topic. Who are we to say that Chelsea, Fulham or Nottingham Forest did not make a perfectly legitimate and accurate R&D claim? It is not for the public or R&D advisors to debate such a topic until we have seen the supporting evidence to determine such claims.

The main area of concern, I believe, is not what type of businesses are making R&D claims; any business should be able to claim R&D if they are undertaking qualifying activity. What constitutes R&D is the question, not who should be allowed to claim.

Media scrutiny and subsequent policy response has brought around welcomed reforms and greater transparency with the introduction of the Additional Information Form in August 2023 and the establishment of the new merged R&D scheme. However, it is this increased scrutiny that has made some companies more hesitant to claim, even where they have legitimate qualifying activities, due to fear of enquiry or misunderstanding about what qualifies. This is particularly true in sectors where media attention has suggested that R&D claims are implausible, despite the BEIS Guidelines being sector-agnostic.

The challenge now is ensuring that public understanding of the scheme reflects its true purpose, which is to support genuine scientific or technological advancement, wherever it arises to drive business competitiveness and growth.